By Shelley Seagler
We can all agree that attitude is one of the biggest predictors of success. Yet when it comes to investing, many people continue to have attitudes of confusion, fear, anger, and even apathy. Changing your attitude is the first step in creating successful investment outcomes.
Wealth deserves a new definition. We have been taught to believe wealth is defined as the number at the top of our account statements. But using a number that is based on the whim of an ever-fluctuating market is illogical. I believe wealth should be defined by your ability to maintain a desired standard of living indefinitely into the future. It isn’t measured by your portfolio’s account balance, but by the inflation-indexed income your portfolio can generate.
Buy and hold is outdated. Like any successful business, cash flow is the key to viability. Bear markets occur about every five years forcing many to sell off assets at a loss to stay afloat. When you invest for cash flow, you make money by owning an asset, not by selling it. Investing for cash flow is the only way to survive in economic markets that can and do drop by 50% to 80%.
Most investments are designed to make Wall Street rich, not you. There is a belief among retail investors that their financial advisors are in business to make money for clients – instead of themselves. This belief is as naïve as it is false. When it comes to your money, the only person with no conflict of interest is you.
Market timing and stock picking are a fool’s errand. Trying to time the market or pick stocks, funds, or any other asset that will go up in price is a fool’s errand. It cannot be done consistently over long periods of time. Outside of that which is expected given the laws of chance, market movement and stock prices are totally random. Anyone who tells you otherwise is uniformed, delusional or lying. All three are a problem, don’t you think?
Emotions are an investor’s worst enemy. You cannot be a successful investor until you learn how to quell the emotions that can so easily dictate your investments outcomes. Fear and greed can easily lead to an investor’s disaster. The best way to avoid this is to stick to a rule-based system like my proprietary strategy the Snider Investment Method.
You alone are accountable for your financial situation. It’s easy to point fingers, but it isn’t your broker, you CPA, the government, your parents, or even your spouse that is responsible for your current or future financial situation. It is you and you alone!